What Stays On Your Credit Report And For How Long?

A credit report is a specific document that records your history with creditors and has a major effect on your future financial abilities. Possessing a ‘good’ credit report is standard as long as you pay your bills and debt repayments on schedule. Having said that, skipping a repayment on a bill or debt repayment can cause significant problems if you plan to receive credit again in the future. Not long ago, the rules have been modified to place a greater emphasis on affirmative history like paying your bills in a timely manner, but overwhelmingly, credit reports are used as a way for creditors to examine your abilities to repay a loan by looking for any financial oversights you’ve made in the past. If you have made some financial oversights, how long does this information remain on your credit report? What kinds of financial oversights are more severe than others? This blog will look at these questions in order to give you a better understanding of how these documents work.

What Do Credit Reports Entail

The following will list the type of information that is normally found on your credit report:

Personal Information for instance your name, address, DOB and driver’s licence details
Joint applicant details if you’ve secured credit jointly with another person
Credit card information
Arrears brought up to date, for instance, any overdue or unpaid debts that have since been settled
Defaults and other infringements for example missed minimum credit card repayments and loan repayments which are over 60 days overdue
All credit applications
Debt agreements for example bankruptcy, personal insolvency, and court judgements
Repayment history which is probably the most vital factor of your credit report. It covers all credit accounts like home loans, car loans, personal loans and credit card loans. Any missed repayments will include information such as the due date, paid date, amount, and any partial payments if applicable
Commercial credit applications for example any business or commercial loan applications
Report requests which lists all the loan providers who have previously requested a copy of your credit report1

Credit Report Defaults

Defaults with creditors will be posted on your credit report and will impact your capability to receive credit in the future, so it’s vital to comprehend what constitutes a default on your credit report. If you cannot make a repayment on a debt, your financial institution has the capability to report your debt to a credit reporting agency who will then register this information on your credit report. Having said that, lending institutions can only do this if the following terms apply:

The default amount is equal to or more than $150;
You’re a ‘confirmed missing debtor’ or ‘clearout’ which indicates the lender cannot contact you because you have changed your contact number and address;
The debt is equal to or more than 60 days overdue; and
The lender has asked you to pay the debt by either sending you written notice in the mail, or by asking you over the phone1

Your lending institution must inform you of any intentions in lodging a report prior to doing so. In most cases, your contract or service agreement will describe when a default can be made and reported to a credit reporting agency.

How Long Does A Default Remain On My Credit Report

The majority of the time, a credit default will stay on your credit report for 5 years, but if a lender cannot contact you because you’ve changed your contact number and address (referred to as ‘clearout’), the penalties are more severe and the default will remain on your credit report for seven years. It is very important to note that even when you do settle an overdue debt, the default will nevertheless stay on your credit report, but the status will be updated to show that the debt has been paid. Whenever you make an application for a loan, the lender will always inspect your credit report first and if there are any defaults, the loan provider can reject such loan applications. If this is the case, the lender must inform you that your application has been rejected based upon your poor credit report.

As you can see, credit reports are serious documents that can dramatically impact your borrowing capability and financial flexibility. In most cases, credit reports are either a pass or a fail, so any default, irrespective of how big or small, will be listed on your credit report for five years. Though there are measures to improve your credit rating (like paying your bills in a timely manner), loan providers are really only interested in any defaults on your credit report and can reject a loan application based upon a single default. If anything, this article highlights the importance of paying your bills and debt repayments on time, so if you find yourself with any financial challenges and can’t pay your bills by their due date, speak with Bankruptcy Experts Newcastle on 1300 795 575 for support, or visit their website for additional information: http://www.bankruptcyexpertsnewcastle.com.au